The government is taking steps to stabilize the system of exchange and the economy as a whole. These steps protect the property of the owners of capital at the expense of those without, and define the next phase of political polarization and the battlefield for the next round of politics. The 2008 general election marks the end of one phase of the political life of this country and opens another.

Something new is emerging out of crisis and destruction. This is not a new process, but rather a critical new point in the progression of the objective process. The stages and phases of the process shape the tasks of revolutionaries.

The financial crisis that came to a head in the fall of 2008 expresses the destruction of value that is undermining the system of exchange. The continuing financial instability threatens the collapse of the entire world economy.

In response to the declining rate of profit and the contracting market for real goods, trillions of dollars had flooded into financial instruments, speculation, and other investments that rest only remotely and minutely on the real production of value.

These trillions of dollars dwarf the value of the real economy. More than $1,000 trillion is invested in these financial instruments on the world financial market – the equivalent of 20 years' real, value-producing, labor-employing global production.

In what some call the "mathematization of the market," electronic technology makes it possible to bundle, re-bundle, track, and pay dividends on investments in financial derivatives, credit default swaps, currency and price speculation, and various other financial investments. The investors are accumulating huge hoards of wealth and inflicting catastrophe on the world's poorest workers. But this wealth does not reflect value.

The sudden loss of wealth in the current crisis expresses the prolonged decline in the amount of labor (value) in the mountains of commodities generated by the world economy. No form or amount of re-regulation, nationalization of risk, or other government intervention can accomplish a return to a sound economy on the old foundation.

Reorganization of the state

The government "bailout" redistributes wealth from public to private. It shifts trillions of dollars, in the US alone, to those institutions that have been accumulating wealth off of our debt, and off of speculation on commodity prices, currency valuations, and interest rates.

But this is also more than a bailout. It is the reorganization of the state to protect private property under new conditions. Although it may seem like the bailouts are throwing good money after bad, there is some method to the madness. The emerging motion is toward the government and the financial sector together controlling and directing the whole economy, buying up the once powerful industrial corporations, and putting an end to the good standard of living that was once possible for, at least, a small section of the working class.

Despite the massive destruction of wealth, the remaining financial and banking institutions are sitting on mountains of cash and buying other bank and non-financial corporations. Some banks are restricting loans, calling in lines of credit and forcing even profitable companies into bankruptcy. Others are cutting back on production, closing stores and factories, and curtailing previous expansion plans.

The trillions of dollars invested into this financial sector are enough to buy up decisive sectors of the infrastructure and the rest of the economy. For years, the world's investment banks, hedge funds, and other financial powerhouses have been buying up the world's water resources and infrastructures. The water industry is the world's fourth largest industry; privatization of the treatment and delivery of water and other essential resources offers some investment stability.

Through the Treasury and the Federal Reserve, the capitalist class is now wielding trillions of dollars in public money to protect its own interests. On the capitalists’ behalf, the government is accomplishing what individual capitalists or even conglomerates of capitalists cannot achieve on their own.

Today, the government is not only privatizing what was public and cutting social spending, but, through the "bailout" and other steps to stabilize the economy, they are institutionalizing and codifying the concentration and intertwining of government and private capital – both their resources and their authority. Which banks and other corporations get the money and how much more they get will change, but the proposal from Treasury Secretary Paulson to the Congress designates, "financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them."

Regardless of its pace and ultimate specific forms, we see a plan unfolding to accomplish a definite purpose: to concentrate wealth and power of the economy in fewer hands, to take another step to restructure the state in order to transform the world economy, to protect private property in the age of electronics, to enforce the transfer of wealth, and to suppress and/or contain the popular anger. The direction is toward concentration and consolidation in finance, the struggle to keep the U.S. dominant in the evolving financial system, and, at same time, to maintain dollar hegemony. This is the objective situation the new Administration will face; Obama must oversee this process.

None of the political solutions can solve the fundamental economic problem that less labor is needed to produce greater mountains of commodities. Wages fall and unemployment rises. People have less money to pay for the necessaries of life. Debt swells. Exchange breaks down. But, we are crossing a political line.


On the one hand, by its history and purpose, the state will attempt to protect the wealth of the capitalists -- no matter how remotely rooted it may be in real production and value – and to guarantee the sanctity of private property.

On the other hand, labor and production form the basis of value, but technology is replacing labor. The ruling class can get past one crisis only by setting the conditions for another even more catastrophic one.

Fascism arises out of such a crisis. Far from a subjective policy or decision, fascism arises to ensure the continuity of private property as the forces of production evolve. The laws of private property are not the same as the productive relations of capitalism. Production without value is antagonistic to capitalist production relations, but there are no new production relations yet in place.

Yet, even as the production relations are broken down, the state has to guard and promote the sanctity of private property. Such a contradictory situation cannot be managed except by the subjective, that is, by the force of the state. Fascism is emerging out of the attempts to solve problems posed by economic and social revolution.

Along with the danger of fascism comes the terrifying danger of war as a way to invest productive capital, shore up markets, and find ways to circulate goods. The subsidizing and concentration of the financial and banking system is laying the foundation for the next round of this process. In the economic, social, and political instability encircling the globe, the danger of war looms large and ominously.

This is a moment of great flux and instability, and much is still unsettled and unclear. But out of the crisis, destruction, and turmoil are bound to emerge not only new forms of private property, but also the gravediggers for all systems of exploitation and private property.

Social struggle vs. private property and the state

The deliberate and publicized actions of the government open a new phase in the relation of the social struggle against the state, and open the way for the political formation of a new class of dispossessed.

The social struggle is the spontaneous struggle for the necessaries of life, that is, food, homes, medical care, etc. This is not a struggle for the political power to seize private property; at best, it is a struggle to redistribute the wealth. As long as capitalism – and its connection between opposing classes in production – was expanding, certain demands of the social struggle could be met within the confines of the social relations of capitalism and the laws of private property.

But things are changing. Whatever exact forms evolve, the next steps in the reorganization of the state express the new economic and political reality, that is, that the movement of people for what they need, now confronts a political obstacle. Before, the main polarity was between capital and labor. Today, the polarity between the government and corporations, on the one hand, and the widening movement of people for the necessaries of life, on the other, is shifting to predominance.

A phase of political polarization

Like all processes, revolutions go through definite stages. Revolution begins with changes in the economy so fundamental that they disrupt society. Out of the contending attempts and impulses to solve the resulting problems, there emerges a class that has the capacity to take society to its next stage of development. The decisive stage of the revolutionary process is when that class forms itself politically and takes on that responsibility.

Over the last few decades, the loss of income, jobs, homes, and healthcare has hit wider and wider sections of the population. This destruction of the material connection between opposing classes sets the basis for the next stage of the revolutionary process. But the economy alone cannot shape this class politically.

Today it is not only the spontaneous movement of the economy, but also, the deliberate actions of the government, and, especially, its restructuring under fire, that are destroying the material bonds between opposing classes and setting the stage for the broader process of political polarization.

The situation in the auto industry sets the pace for the working class as a whole. The autoworkers' fate, and that of those in all related industries, is now in the hands of the government. Most workers know that they are going to get cut out and lose the benefits they once enjoyed. In wave after wave, more workers are finding themselves directly under the wheels not only of the economy, but also of the government.

That sector of the class that used to enjoy the social contract is now getting cut out. These workers have the skills, connections, and experience to pull ahead the whole movement. There are still plenty of well-off secure workers, but the next rounds of economic crisis and government attempts to stabilize the economy will awaken wider circles of these workers.

Every step of the U.S. government, and likewise, every global meeting convened to try to save the world economy, strengthens the power of private property over society. Every step drives the living standards of the U.S. workers down toward the level of their global sister and brother workers, and sets the stage for the education and political formation of the new class.

Whatever further concentration or stabilization is accomplished will be at the expense of the have-not masses of the world. The polarity between wealth and poverty in the world is already intolerable. The International Labor Organization (ILO) predicts another 20 million people unemployed worldwide by the end of 2009, over and above, the global unemployed figure of 2007. This cannot help but intensify the already simmering geopolitical tensions.

In every corner of the globe, including countries of the former Soviet bloc, "post-colonial" and "emerging economy" countries like India and South Africa, and "left-leaning" South American countries like Venezuela and Brazil, the crisis will intensify economic and social polarization and challenge the restraints on class politics. There is no telling which country will erupt in destabilizing social explosions.

Elsewhere the social and political explosions and other ramifications may hit faster than they do here in the U.S. But, our history has unfolded in prolonged periods of apparent calm, followed by quick explosions and change. Revolutionaries need to prepare.

The reorganization of the state to protect the interests of private property against the interests of the growing class of dispossessed is not a smooth, clear, or pre-ordained process. But, the action of the government to address the financial crisis shapes the battlefield on which the new class can form itself politically with the sense of class interests and the need for the political power to enforce those interests. In this sense, it opens a new phase in the process of political polarization.

The subjective conscious understanding of any new situation lags behind its objective reality. But, it can catch up in waves, eruptions, and leaps. Today, the scattered outrage cries out for an organizational vehicle to coalesce it. The new class of dispossessed can develop its political identity, voice, and consciousness in the battles to solve the problems it faces. Nothing is guaranteed. Outcome and direction will be determined in battle.

History presents a battlefield

Inseparably intermingled with the corporations, and, now, most visibly with the corporations of finance, the state is inserting itself into the management of the economy and society. In doing so, it creates a battlefield on which the class of dispossessed can form itself politically within the struggle for the interests of society.

This process is not at the will of the revolutionaries. Nor, can it happen all at once. But, this moment does represent a line being crossed. Every step to reorganize the state to protect private property under new conditions gives to the scattered struggles a common political edge.

The battle over what the government will do and whose interests it will serve is emerging on all fronts. The scattered struggles begin to share a common, immediate, and political focus and cause – that the government act on behalf of the working class and society as a whole – not for the interests of capital. None of the scattered struggles can go forward on a scattered non-political basis. To go forward, the movement needs to coalesce in a common political direction.

At other points in modern history, the state, the official representative of capitalist society, has taken on the direction of production. In the late 1800s, government intervention was an objective necessity in order to deal with the economic crises born of the clash between the social character of large-scale industry and the private appropriation of its product by the capitalists. The nationalizations and trusts of that epoch addressed the needs of an expanding capitalist system.

We are today in a social revolution of a different quality, and the state again must begin to take command of the economy. This time, it is to maintain, protect, and promote the laws and sanctity of private property under the conditions of antagonism to and destruction of the capitalist system.

As fascism emerges out of the steps to solve the fundamental problems facing capitalism, the ruling class will have to develop a mass base for fascism. Their target will be the white worker. Their route will be the consolidation of the fascist elements and the coalescing of a program that proposes to solve the immediate problems people face. Their purpose is to contain class struggle.

Up to now, the only period of class struggle in the history of our country took place during the defeat of Reconstruction. And its character as such was obscured primarily by the color question, but also, because that struggle was fought out mainly in the South. Since that time, the objective basis for the opposing classes in society to confront one another politically has not existed. Those conditions are today emerging.

This struggle will be fought out on the battlefield mandated by the economy and shaped by our country's history. The general objective process that has been evolving is finding political expression.

Tasks of revolutionaries

This moment escalates the responsibilities of revolutionaries. Our assessment of the objective process and of the levels and forms of awakening guides and shapes our work. General propaganda that describes the problem in society and its ultimate solution does not meet the demands of the time. Nor, can revolutionaries simply agitate along defensive lines. The struggle cannot advance except along political lines.

Out of stagnation, crisis, and destruction comes growth on a new foundation. This is as true for revolutionaries today, as it is for the ruling class and society as a whole. Now is a time for revolutionaries to stay on their toes, that is, to understand the profound changes at the foundation of society and to recognize and seize the political opportunities.

Political Report of the League of Revolutionaries for a New America, Standing Committee, December 2008.

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Revolutionaries Face Greater Responsibilities as Crisis Reaches Critical New Point